U.S. Authorities Wind Down Swiss Bank Program

Offshore Account Update

Posted on February 24, 2017 |

In 2008, the idea was formed for a program in which Swiss Banks could avoid criminal prosecution for the bank's role in facilitating the evasion of U.S. taxes. The goal was to catch U.S. affiliated individuals who had funds offshore they were not declaring. The U.S. and Swiss governments negotiated on how to structure efforts to fight tax evasion, and in 2013, the Swiss Bank Program launched.

The program is now coming to an end. Eligible banks have participated in the program, and the program is in legacy mode, with U.S. authorities using the information they have obtained from the banks to pursue civil and criminal actions against accountholders. The U.S. is also moving on to other efforts to fight tax evasion, including crackdowns in other regions where investors are still attempting to maintain the privacy of their offshore accounts.

If you have funds offshore, the close of the Swiss Bank program does not mean you are safe from facing consequences if you have not declared your accounts. You still face a substantial risk of an investigation and legal action. A New Jersey tax law firm can help you to respond if you are accused of wrongdoing and can assist you in finding proactive solutions to dealing with undeclared offshore funds.

The Swiss Bank Program is Coming to a Close

The Swiss Bank Program divided banks into four different categories. Category 4 banks had few U.S. affiliated accountholders and virtually no exposure to potential accusations of tax evasion. No banks fit within this category. Category 1 banks were already being investigated by U.S. taxing authorities and were thus not eligible for participation in the Swiss Bank Program. There were 14 category 1 banks.

This left Category 2 and 3 banks, which have now made their deals with the Department of Justice (DOJ).

From July to December of 2013, a total of four Category 3 Swiss banks, along with one banking cooperative, provided proof to the DOJ of their compliance with U.S. tax law and they received non-target letters from the Department of Justice.

Category 2 banks were the banks which were believed to have facilitated tax evasion, but which weren't yet under investigation and so were eligible to take part in the Swiss Bank Program. These banks who chose to participate in the Swiss Bank Program had to pay a fine, and had to come forward voluntarily to report their role in tax evasion schemes. The banks together paid $1.36 billion in penalties, with 80 different Swiss Banks paying an average penalty of around $17 million.

The banks also had to give U.S. authorities detailed information about accountholders, which they did. These Category 2 banks are currently continuing to cooperate with U.S. authorities as those authorities move forward with taking legal actions against U.S. accountholders who violated disclosure rules for offshore funds.

If you are one of the accountholders whose information was provided to the DOJ, you should be aware that the close of the Swiss Bank Program means taxing authorities are satisfied they have the information necessary to pursue action against many accountholders.  You should speak with attorney Kevin Thorn to find out what options you may have for being proactive about protecting yourself as taxing officials continue to pursue criminal and civil cases.

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